first majestic silver

Does it Matter?"

Technical Analyst & Author
February 6, 2007

There has been more talk in recent weeks on the subject of gold price manipulation. The purpose of this article is not to attempt to go into the details of whether or not there is manipulation, or how much there is, or who is doing it or why, because all of this is has been raked over by other writers in considerable detail. The purpose of this article is to examine what difference it makes to us as investors and traders, and how best to live with it.

The first point to make clear is that to whatever degree there is gold price manipulation/suppression, there is nothing much the ordinary investor can do about it - you are going to have to live with it, like taxation - so there's no point in losing any sleep over it.

The next point to grasp is that there is a "might is right" issue here. The plutocratic network responsible for gold price suppression knows that even if they are outed, they can simply brazen it out with an attitude of "Tough luck - there's nothing you can do about it". When you understand this point you realize that those who have worked tirelessly for some years to expose what is going on will probably only ever achieve a pyrrhic victory.

Now here is the fundamental point to grasp, which is the central message of this article. Even if it is proven beyond all doubt that there is a powerful conspiracy to restrain the price of gold, and even if, despite being dragged out into the light of day and branded, those responsible brazenly continue their operations, they will nevertheless be rendered increasingly irrelevant by unstoppable market forces. Take a look at the following chart, which shows the price of gold in Swiss Francs, and you will see that this is already happening, and the picture against the Euro is very similar. They have already lost control, even if they had it - as we can clearly see on this chart, they lost it in mid-2005. All that is left to them now is to fiddle about on the edges trying to fleece traders by creating false breakouts etc and engage in their ritualistic Friday gold bashing.

What has and is happening is best understood not by considering high finance, and going into complex and long-winded economic arguments, but by considering the analogy of an ordinary fruit and vegetable market. Suppose some regulatory body tries to cap the price of potatoes and there is an acute shortage. Unless it is prepared itself to ensure sufficient supply of potatoes to meet demand, the tables in the marketplace will empty and a vibrant black market will spring up offering potatoes at much higher prices. This is the situation we have found ourselves in increasingly with gold since mid-2005. There is growing demand for the metal itself worldwide and powerful players who know the score are not and will not be satisfied with scraps of paper - they want to see the color of their money, and that color is gold - and silver. In addition, smaller players are getting in on the act through the ETF's (Exchange Traded Funds). As the money in these funds expands it must be reflected in increased reserves of the metals and this is providing additional and increasing demand for gold and silver. In the face of increasing demand for the metals themselves, no amount of chicanery by conspirators attempting to suppress the price will succeed - short-selling, derivatives strategies, hedging by certain large gold producers, lying about and fiddling the figures for reserves in bank vaults - all of it will be swept aside by a good old fashioned groundswell of demand.

For practical purposes the arguments about whether the gold market is manipulated are largely a waste of time. So what if it is? - any market in which powerful players are involved is subject to manipulation to some degree, but even they must eventually yield to the overriding force of the primary trend.

 

Clive Maund, Diploma Technical Analysis

[email protected]

www.clivemaund.com

Copiapo, Chile, 6 February 2007

Clive Maund

Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.

Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.

The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.

Visit Clive at his website: CliveMaund.com


Minting of gold in the U.S. stopped in 1933, during the Great Depression.
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